A decade after the credit crisis, investors are returning to where it all began. The U.S. mortgage sector, blamed in large part for the near-collapse of the global financial system, is now seen by many as a high-quality market forged by fire. Yet along with new players, new worries are emerging.
The mortgage-backed securities market, now mostly supported by U.S. government agencies, is undeniably safer than it was 10 years ago. Lending standards have improved as the share of riskier non-agency issuance has plunged. Meanwhile, the market has strengthened as more buyers seek stability—and opportunity—in a sector once tarnished by the housing-market implosion.
